Last week toward year-end market

Since the week ends and we go into the year-end trading season in earnest, this week effectively marks the last market of the year.

The market is awaiting the passage of the U.S. tax reform bill.

Because the passage is almost already priced in
even if it is passed within the year, I have the impression that the market won’t move much?

It seems the impact on the market would be larger if it cannot be passed before year-end.

Even last weekend’s IMM yen short positions remain stretched to the limit.

We expect results within this week, but if passage is delayed within the year
IMM yen short positions are likely to unwind, and the USD/JPY is bound to fall.

How much it will fall by? No one knows.

However, since year-end trading has low liquidity, when a material impact comes out, there is a strong possibility of a movement of several yen at once.

A sharp rate fluctuation at year-end has
repeatedly occurred in past markets as well, so please be well aware of it.

Personally, I think the risk of a decline in the USD/JPY is higher.


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